In a Pismo webinar, Vishal Dalal, CEO for North America, EMEA, and APAC at Pismo, discussed core banking systems transformation. He analysed how next-generation technology at the core is vital for financial institutions to achieve real digital transformation, beat the competition, and meet customer demands.
A recent study by Accenture shows that 60% of banks already use the cloud to host data. Over 50% have adopted new software to modernise CRM, HR, and other office tools. However, the number remains in single digits when it comes to the core banking system.
According to Vishal, this resistance to changing legacy systems often happens due to the risk aversion of moving to the cloud or the intention to “save” a few dollars. But this mindset does not fit with today’s fast-paced world.
No more brain surgeries
“In the legacy world, a core banking transformation was the equivalent of doing a heart and a brain surgery simultaneously.” This is no longer true since modern architectures allow smooth and safe core migrations. “Financial institutions must be bold in modernising. For example, many regulators are evolving sophisticated approaches to the public cloud. In addition, large banks are starting to realise the value of using the public cloud.”
Creating new and differentiated products rapidly, reaching customers, and making real-time offers are only possible with an event-driven architecture. When it comes to instant scalability, this can only be done meaningfully using the public cloud.
“The competitive differentiation will become what you can do with the data you can get. What you can do with the ecosystem you can get and how well you can stitch it together. Everything needed to get to this state is now available and much cheaper. There’s no incentive to stay on sort of legacy systems and suffer to get all of these things,” Vishal says.
Build x buy dichotomy
A common dilemma in financial services is between in-house building a banking or payments system or buying it ready to use. Vishal says that banks should buy things they know they won’t have the engineering capability to do or, if they do, the high cost to build them from scratch won’t be worth it.
“You want to buy something you cannot reasonably do yourself. High-speed, high-resilience transaction processing in the public cloud, for example. You want to build new features or stitch together some of these APIs you find in the cloud,” he explains.
Smooth and safe
Despite the fear that may paralyse market leaders when talking about core modernisation, a next-gen stack can guarantee a smooth and safe migration. Vishal highlighted some of the benefits that the modern technology stack provides to the core banking ecosystem:
- UI/UX – stitch user journeys by calling APIs and data
- API layer – use microservices to separate functionality into small slices to avoid spaghetti code
- Data layer – use SQL/NoSQL and event-driven architecture to react in real-time to events
- Tooling layer – use CI/CD for frequent, rapid, and automated releases
- Cloud layer – use the public cloud for true horizontal scalability
You can watch the webinar below:
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